Question - Preparing a Statement of Cash Flows
Mohana Resorts Corporations is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:
|
|
2015
|
2014
|
|
Balance Sheet at December 31
|
|
|
|
Cash
|
$136,500
|
$127,000
|
|
Accounts Receivable
|
$30,500
|
$44,500
|
|
Merchandise Inventory
|
$44,500
|
$36,000
|
|
Property and Equipment
|
$418,500
|
$300,000
|
|
Less: Accumulated Depreciation
|
($118,000)
|
($91,500)
|
|
|
$512,000
|
$416,000
|
|
|
|
|
|
Accounts Payable
|
$18,000
|
$38,000
|
|
Wages Payable
|
$8,000
|
$2,400
|
|
Note Payable, Long Term
|
$119,000
|
$142,000
|
|
Contributed Capital
|
$197,000
|
$131,800
|
|
Retained Earnings
|
$170,000
|
$101,800
|
|
|
$512,000
|
$416,000
|
|
|
|
|
|
Income Statement for 2015
|
|
|
|
Sales
|
$390,000
|
|
|
Cost of Goods Sold
|
$184,000
|
|
|
Depreciation Expense
|
$26,500
|
|
|
Other Expenses
|
$86,000
|
|
|
Net Income
|
$93,500
|
|
|
|
|
|
Additional Data:
a. Bought equipment for cash, $118,500.
b. Paid $23,000 on the long-term note payable.
c. Issued new shares of stock for $65,200 cash.
d. Dividends of $25,300 were declared and paid.
e. Other expenses all relate to wages.
f. Accounts payable includes only inventory purchases made on credit.
Required:
1. Prepare the statement of cash flows using the indirect method for the year ended December 31, 2015.
2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash by Mohana Resorts during 2015.